Expensive social security charges for Bercy: A lawyer groups tax reclaims from all over Europe.

A violation of European Law might very soon force France to reimburse thousands non-resident tax payers up to now subject to social security charges (most importantly CSG an CRDS) levied on their income from assets or employment in France: This is the result of the Advocate General’s conclusions in a pending case before and of past decisions of the European Court of Justice in Luxembourg, reports Maître Clint Goffin van Aken, lawyer specialized in cross-border conflicts in Europe. « Filing the reclaims in time will be a race against the clock », he says : the end-of-year deadline for such reclaims coincides with the expected decision of the European Court of Justice.

THE FACTS

Currently France levies 15,5% CSG, CRDS and other social security contributions on income from assets. By levying this charge from taxpayers not subject to the French social security system, France violates European law. According to the Advocate General, Eleanor Sharpston, in her conclusions of 21 October 2014, « a person exercising an activity in one Member State is only subject to social security regulation of that Member State. “

The affair relates to a French resident working in the Netherlands who refused to pay the CSG and the CRDS on life annuities contracted in the Netherlands, arguing that he was not subject to the French Social security system that those contributions are supposed to finance.

UNAMBIGUOUS PRECEDENTS

The European Law is very clear on this question. France has already been condemned by the European Justice in 2000, recalls Maître Goffin van Aken: « At the time, the European Court of Justice held that levying CSG and CRDS on substitute income of persons living in France, but subject to social security law in another member state, was not in accordance with EU law. It is therefore very likely that the European Court of Justice will state in the same sense at the end of this year in the present case. In the name of the principle of the application of only one member state’s social security legislation, the European Union is simply trying to avoid the application of different national legislations at the same time for the same income, whatever nature such income may be. « Whether it is income from employment or from assets, does not matter much according to the advocate general », explains Maître Goffin van Aken.

THE SECRETARY OF STATE FOR THE BUDGET IS ALARMED

The matter, which has also lead to the opening of a proceeding for violation of community law by the European Commission against France, is taken very seriously by the members of parliament representing French Nationals living abroad. It is due to their pressure that the Secretary of State for the Budget has recently put together a working group supposed to study the social charges levied on income from assets of French Nationals living abroad. According to Maître Goffin van Aken, the amount of reimbursement could be counted in millions of Euros, putting an additional burden on already tight public finances. « The matter is likely to get very expensive for France because it potentially concerns thousands of real estate owners, but also income of thousands of foreigners, Germans, Dutch or British citizens for example, living in France but still affiliated to their country’s social security system. » The questions concern social charges on real estate income, life annuities as well as capital income and gains.

FILES ARE INCREASING

In his Strasbourg firm, specialized in cross-border community law cases, the first plaints and requests for information have arrived, only two weeks after the publication of the Advocate General’s conclusions. « Only the persons having filed a reclaim may be reimbursed, if of course the Luxembourg Court follows the Advocate General’s conclusions. » One may not count on the French State to reimburse spontaneously the taxpayers unduly charged. The time limit for complaints in fiscal matters expires, except in certain circumstances, on December 31st of the second year following the year of payment, which means at the end of 2014 for social charges paid in 2012. « It’s the beginning of a race against the clock » comments the lawyer.

Maître CLINT GOFFIN VAN AKEN

Clint Goffin van Aken is a lawyer specialized in cross-border litigation and the application of European law in France. His firm is based in Strasbourg, seat of the European Parliament and the European Court of Human Rights, and acts all over France in order to defend the interests of Community nationals in cross-border issues.

However according to a decision of the Administrative Court of Paris dated October 16, 2013, N. 218875 and 1218924 there is a special (shorter) period during which social taxes on real estate capital gains can be contested – being December 31 of the year following the taxation. According to this jurisprudence the taxation on real estate capital gains earned in 2013 may only be contested until December 31, 2014.